Knowledge」カテゴリーアーカイブ

Don’t invest gambling on profit announcement.

stux / Pixabay

Don’t try to trade across profit announcement dates. Even if the stocks you hold have paper loss, you should liquidate them the day before the profit announcement day.

Profit announcement is not chance.

Some investors regard the profit announcement as an opportunity that they can make a profit, because stock prices are likely to fluctuate greatly the day after the profit announcement day. However, it is too difficult to read how investors respond to the profit announcement. As a result, Trading across the profit announcement days is not so much trading as gambling.

Too difficult to read investor’s sentiment for profit announcement.

Why is it difficult for investors to estimate how other investors respond to the profit announcement? Is it a simple story that if company’s profit goes up, the stock price rises, or if company’s profit goes down, the stock price declines?

No. That’s not a simple story.

Even if company’s profit goes up, the stock price might fall unless it is more than investor’s expectation. Even if company’s profit declines, the stock price might rise unless it is more than the investor imagined.

“Don’t invest gambling on profit announcement.” is introduced in “Swing Trading with Oliver Velez”, which is a very famous book among investors.

【Swing Trading with Oliver Velez】
https://www.amazon.com/Swing-Trading-Oliver-Velez-Wiley/dp/159280151X

I myself have invested gambling once for the profit announcement. On August 3rd in 2015, the stock price of Honda rose, because of its profit announcement. The reason of the stock price increase is in vehicle sales in North America. And then, I bought a Toyota stock on August 4th, which was its profit announcement day. I expected the stock price would rise on August 5, because Toyota’s vehicle share is bigger than Honda’s in North America.

As a result, I got loss due to gambling investment for the profit announcement. Toyota’s profit results were never bad. Although they were rather good, investors didn’t seem satisfied.

Since then, I have never done any gambling investment for profit announcement.

Caution
The contents of this blog are written based on the personal opinions. With respect to the loss caused by investment based on the contents of this blog, I do not take any responsibility.

Thank you,

k-zma

Support lines and resistance lines monitored by most investors.

geralt / Pixabay

What do most investors regard as resistance lines and support lines to expect the rise and fall of stock prices?

What are resistance lines and support lines?

First of all, I’ll explain resistance lines and support lines themselves before specifically introducing resistance lines and support lines.

Resistance lines are the lines to resist the rise and fall of stock prices. If the resistance line is above(below) the stock price when the stock price is rising (falling), rise(decline) become dull at the same time as the stock price has reached the resistance line. Stock prices might also turn to fall (rise).

Support lines are the inverse of the resistance lines. Resistance lines will interfere with rise and fall of stock prices, but support lines make roll to support rise and fall of stock prices. In other words, when the support line below(above) the stock price when the stock price is rising (falling), the stock price will receive the support of the rise(decline) at the same time that the stock price has reached the support line.

Support lines and resistance lines specifically monitored by most investors.

What do most investors regard as resistance lines and support lines? Resistance lines and support lines on a daily chart, a weekly chart, and a glance equilibrium table(Ichimoku Kinko Hyo) are presented bellow.

■A daily chart
5-day moving average line
25-day moving average line
75-day moving average line
200-day moving average line

■A weekly chart
13-week moving average line
26-week moving average line
52-week moving average line

■ A glance equilibrium table(Ichimoku Kinko Hyo)
Conversion line(Tenkan-sen)
Reference line(Kijun-sen)
Lagging line(Chikou span)
Preceding span 1(Senkou span A)
Preceding span 2(Senkou span B)

What is very important here is that “most” investors regard the lines and the spans above mentioned as the resistance lines and the support lines. In order to win in the stock investment, we need to accurately make a decision whether to buy or sell the stocks according to whether most investors feel like buying or selling. It is very important for us to know what most investors monitor and how they feel.

Some investors monitor the 7-day moving average line rather than the 5-day moving average line, nevertheless most investors monitors the 5-day moving average line. This is one of the typical loser’s cases.

Your next action

Change the setting of the char software you use every day to display the lines and the spans introduced above. And, think of how most investors feel now according to the charts to design a investment strategy.

Caution
The contents of this blog are written based on the personal opinions about resistance lines and support lines, and the sentiment of short-term investors, medium-term investors, and long-term investors. With respect to the loss caused by investment based on the contents of the blog, I do not take any responsibility.

Thank you.

k-zma